Europe continues to source massive amounts of liquefied natural gas (LNG) from the United States, which has outpaced Russian and Qatari supplies since 2020. At the same time, Norway maintains a steady flow through its pipelines, essential for European reserves during the storage period. This dynamic highlights the strategic importance of diversifying gas supply sources to ensure the continent’s energy security.
Analysis of LNG and gas flows
The United States has emerged as the most important LNG supplier to Europe since 2021, taking the place of Russia in 2020 and Qatar in 2021. According to data from S&P Global Commodity Insights, the United States has supplied 4.4 billion cubic meters (Bcm) of LNG to Europe (excluding Turkey) in May, more than double the 2 Bcm received from Russia. Over the first five months of the year, Europe imported 29.2 Bcm of LNG from the United States, compared to 10.5 Bcm from Russia. Comparatively, the previous year, these figures were 34.4 Bcm and 9.2 Bcm respectively.
However, favorable economic conditions in Asia reduced U.S. shipments to Europe in May. While Asia offered better financial returns, U.S. LNG cargoes were diverted. LNG deliveries from the Yamal project in Russia have remained relatively stable since the start of the year, reflecting continuity in supply despite geopolitical tensions.
Economic impact of geographic arbitrage
Geographic arbitrage played a crucial role in the distribution of LNG cargoes. U.S. exports to Europe fell from 71 cargoes in January to 43 in May, due to better economic prospects in Asia. “Higher profit margins in Asia began to divert U.S. cargoes as early as late last winter,” said Alija Bajramovic, senior analyst for European and Russian LNG at S&P Global Commodity Insights. For example, the DES Northwest European marker for August was valued at $10.815/MMBtu on June 20, compared to $12.872/MMBtu for JKM, the benchmark price for LNG cargoes destined for Northeast Asia.
This price divergence has excluded European buyers from global competition for sea cargoes. While European demand remains relatively weak, heatwaves in Asia have kept demand for cooling high, increasing reliance on LNG imports.
Role of Norwegian supplies
Meanwhile, Norwegian gas flows to Europe continued to be the strongest source of pipeline gas. In the first five months of the year, Europe imported 37.5 Bcm of gas from Norway, according to data from S&P Global Commodity Insights. This constant flow is vital to meeting Europe’s storage needs, especially during periods of low demand.
In comparison, around 50 million cubic meters per day of gas are exported from Russia via the TurkStream pipeline, and around 40 million cubic meters per day transit through Ukraine to Central Europe. Alija Bajramovic clarified that “the higher share of total exports [de gaz et de GNL] from Russia to Europe is more due to low demand for LNG due to weak overall gas demand, rather than a change in supply patterns to Europe. Russia remains a marginal gas supplier to Europe. »
LNG and natural gas supplies to Europe remain crucial for the continent’s energy security. Despite a decline in US deliveries due to more favourable economic conditions in Asia, Norway and the US continue to play a central role. Their ability to adjust flows according to market conditions underlines their strategic importance for Europe. Diversification of supply sources remains a priority to mitigate geopolitical and economic risks, thus ensuring long-term energy stability for the continent.
